MSNBC has an interesting article on Mind Reading. Usng a functional MRI (fMRI) machine, which is able to show brain-activity in real-time, Prof. Quartz (neuroscientist) and Prof. Camerer (economist) have been using the machine to understand problems of decision-making.
Prof. Glimcher, a a neuroscientist at NYU, has shown that:
the rate at which these neurons fire is proportionate
to the expected utility of the juice payoff. The implication is
electrifying, especially to economists: an abstract, mathematically
derived formula appears to be literally hard-wired into the primate
brain.
We can be thankful that most mainstream economists seem to have very little
understanding of the scientific method, and couldn’t design a real (as
in, acceptable by Nature/Science) experiment if their lives depended on
it. Otherwise, we’d have every mainstreamer trying to “quantify” in
biological terms “utility functions” for people. (actually, this is moot
for economics, since even if “utility functions” can be biologically
characterized and quantified, they are still constantly changing…you
can’t take out the element of personal freedom of choice). Unfortunately, mainstream economists can collaborate with neuroscientists, who do know how to design experiments. The problem is that mainstream economists aren’t going to provide very useful input for designing neurological experiments relevant to economics, as can be seen from a few considerations.
Regarding the experimental games of investing/etc, they are interesting,
but fundamentally flawed. There is a fundamental error in these
experiments. In these experiments, two partner’s play a game with 10 rounds, and they know that there are 10 rounds. In real life, we don’t know when the “game” is going to
end. So, the idea of trying to cooperate until the last, and then screw
your opponent over on the last round, is flawed, since we don’t know
when the last round is. Furthermore, real life is not a game. Even if we
manage to pull off a real “win” and screw over a creditor, borrowing
money, and then dying, there are still
consequences: for our heirs, who will inherit less or nothing.
A way to do these experiments which would be more true to real life
would be to randomly determine how long each “set” is going to be, and
not telling the players this, nor even telling them what the probability
is that the set is going to be certain lengths (that is, you would
randomly select from different randomized selection-processes which are
differently distorted). Also, we have players who are playing thousands
of miles apart. How about we put these players in the same room and
introduce them to eachother, to introduce a tiny element of consequence
for one’s actions. When you know your opponent, are you just as willing
to be a Scrooge on the last round?
These are still fascinating ground-breaking experiment, however. They could be improved by Austrian insights.
Some relevant links:
- Steven Quartz’ Homepage, which contains a link to his lab’s home-page and a neuro-economics course.
- Collin Camerer Homepage
- George Loewenstein Homepage
- Paul Glimcher Homepage
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